Our understanding of marketing has been shaken. After years of the advertising world assuming that differentiation leads to sales success, marketing professor Sharp has proven it: No one cares. 17% only of all consumers think that the brand they buy is unique. Researchers have found that strategic differentiation is nowhere near as important as people think. What matters instead?
Can we do without unique selling points, competitive advantages, etc. in the future?
Development phases of marketing
Marketers have to review their methods and theories at regular intervals. New findings from research and constantly changing customer needs make marketing as a specialist field an exciting challenge. Let's take a brief look at the development phases and their underlying mindsets.
The 1950s were characterized by a focus on production. After the Second World War, the main focus was on satisfying the huge demand and Mass production to drive the company forward. In the 1960s, the focus shifted from production to sales. The change from Seller's market to buyer's market took place. Due to the oversupply, consumers and their needs came to the fore in the 1970s. Market segmentation was invented.
In 1980, strategic competitive advantages and their importance in a market with increasingly equivalent marketing activities were finally discovered. It was no longer enough to respond solely to the needs of the customer. Companies had to differentiate themselves by means of USP (Unique Selling Proposition), KKV (comparative competitive advantage) or SEP (strategic success position) from the competition. Brand differentiation was born.
Figure 1: Development phases of marketing
Long live differentiation, differentiation is dead!
For years, marketing has propagated the development of strategic competitive advantages. Everyone talked about Unique selling points. Marketing departments racked their brains over differentiation and positioning. Product managers discussed with advertising experts what makes toothpaste #54 so unique.
All for free! At least that is what the findings of the Australian Ehrenberg-Bass Institute suggest. Researchers have found that strategic differentiation is nowhere near as important as people think. Consumers hardly remember the communicated values of the product or company. What is even more alarming is that users do not "Favorite brand" are not even considered particularly original.
Byron Sharp referred to these findings in his book "How Brands Grow". Only 17% of the consumers surveyed perceive their preferred brand as unique. Sharp then concludes "Branding lasts, differentiation doesn't". What does this mean for the purchasing decision process?
Branding: How logo & co. influence purchasing decisions
Sharp proves it: Customers make their purchasing decisions based on the Look and feel of the brandinstead of remembering the values communicated by the company. When you buy a toothpaste, it is mainly because the logo and the product packaging are unmistakable to you. You can easily distinguish brand X from brand Y. However, you do not (consciously) think about the special features of brand X compared to brand Y (e.g. makes teeth whiter or tastes better).
In his book "How Brands Grow", Sharp uses seven rules to show how sales success and market share can be increased. One of these rules is "Create and use distinctive brand assets". What is meant by this? Brand assets are elements such as logos, slogans, fonts or colors that make it easier for consumers to identify the brand.
A positive purchase decision is made when the customer quickly notices and recognizes the brand image. The red of Coca-Cola, the Mickey Mouse ears of Disney, the three stripes of Adidas or the catchy slogan of Nike "Just Do It" are examples of the unmistakability of successful brands.
Differentiation vs. distinctiveness: who is right?
Since the publication of "How Brands Grow" over 10 years ago, two camps have formed in the field of marketing, debating with and sometimes against each other. This can be observed above all in English-speaking countries. Daniel Differentiation argues with Diana Distinctiveness. Daniel is into values and "why's". He reads books by Simon Sinek ("Find your Why") and Al Ries ("Positioning"). His world is strategic. He wants to differentiate his brand.
Diana, on the other hand, believes in the look and feel of her brand and prefers to invest in logos rather than values. She reads books by Byron Sharp ("How Brands Grow") and David Airey ("Identity Designed"). Her world is tactical. She wants her brand to be unmistakable.
Who is right? Both. Daniel starts by asking himself on a strategic level what makes his brand so different, while Diana makes sure the logo and tagline are highly recognizable. Before the Ehrenberg-Bass Institute shared its research findings, Daniel had an office in a prime location and Diana had to make do with a secondary location. Today, the two sit together as equals. Strategic differentiation has lost its high status, but not its raison d'être.
Table 1: Difference between differentiation and distinctiveness
Unique selling points as the basis for distinctiveness
The question must not be "Differentiation or distinctiveness?", because both concepts should be integrated into the development of a brand. The customer may not see it - but only the underlying values and ideals of a company make it possible to create a distinctive brand identity. Designers and copywriters need a starting point for their graphics and slogans.
If you don't know what the brand stands for internally and how it differentiates itself, you can't express it externally. What it doesn't need, on the other hand, is too much focus on being different. No USP for your own brand? The same Assortment like the competition? Not so bad, according to the findings of the Ehrenberg-Bass Institute.
Nevertheless, strategic considerations of differentiation should be incorporated into the overall visual appearance of the brand. This is the only way to make it tangible and authentic.
Brands need less differentiation and more humanity
The American economist Philip Kotler has created standard works with his books. One of his latest books deals with the further development of marketing. Even though experts talk about consumers and customers, it is ultimately people who buy something.
They fall for cheap advertising tricks and have a good feel for the authenticity of company appearances and product claims. Kotler postulates: "Brands must be human". He uses 6 attributes that make successful brands to show exactly how this works.
People strive for perfection, even if they never come close to it. We trust other people who celebrate their successes but also share the downsides with us. Brands should be exactly the same - approachable and likeable, but also vulnerable. This is the only way to build a bond. Table 2: The six attributes of human brands according to Kotler
Brands are successful when they are authentic. Brands must not radically different from each other, such as Theories from USP and unique positioning. Differentiation is still justified, even if its importance has declined. Companies should focus on building unmistakable brand assets. It is more important to create distinctive logos and slogans than to define and communicate unique selling points.
Nevertheless, companies should engage in strategic considerations regarding identity, differentiation and values. This is the only way to give their brands a face. This is important because personalities differ from one another.
The Brand building in the online and offline world needs strategic as well as tactical considerations. Being different and being distinctive are not mutually exclusive. Both are justified. Companies should retain this openness and create brands that are different and unmistakable - just like us!
- Bruhn, M. (2019). Marketing. Wiesbaden: Springer Gabler.
- Kotler, P. (2017). Marketing 4.0. Frankfurt/New York: Campus Verlag.
- Sharp, B. (2010). How brands grow. Oxford: Oxford University Press
- Ehrenberg-Bass Institute (2020, February). Differentiation vs. distinctiveness. https://www.marketingscience.info/differentiation-vs-distinctiveness-i-e-stand-out-or-be-distinctive/